CostCo’s Farm-To-Table Rotisserie Chicken

Costco is building a farm-to-table production system in Fremont, Nebraska, to manage both the supply and demand of its rotisserie chickens.

About 100 chicken farmers will sign a 15-year contract to raise enough chickens suited for the rotisserie. Farmers are vertically integrated with Costco’s production system that consists of a processing plant, hatchery, and feed mill.

The production system can process two million chickens per week at full capacity, more than enough to meet Costco’s annual demand of 60 million rotisserie chickens.

1. What are the operational advantages of Costco’s farm-to-table production system for rotisserie chickens?

Guidance: Costco will be able to ensure a steady supply of chickens that are consistent in quality and size for the rotisserie. Costco can also better control its supply and demand of rotisserie chicken

2. What is the significance of the supply chain integration for Costco’s rotisserie chicken?

Guidance: With a vertically integrated rotisserie chicken supply chain, enough chickens of the suitable size will be supplied by Costco’s farmers and processed at its plant to be sold to customers at a fixed price of $4.99.